Financing

Financing

NRC Group ASA uses debt and equity to ensure long-term financial stability in the Group. Financing is intended to ensure predictable financial frameworks for operations and provide shareholders with returns in line with our dividend policy. The Group's capital structure considers the necessary financial flexibility to implement strategic plans, manage existing debt financing arrangements, as well as working capital needs and provide necessary funds for dividend payments. The long-term ambition is to have a leverage ratio of less than 2.5x.

The Group manages its capital structure and makes changes based on an ongoing assessment of the current economic conditions and prospects both in the short and medium term. Capital management is monitored based on available liquidity and net interest-bearing debt, as well as the Group's leverage ratio, interest coverage ratio and equity ratio.

Overview of debt financing

  • NOK 400 million in green bond loan (maturing in Q4 2027)
  • EUR 22 million in term loan (amount as per Q3 2023, maturing in Q3 2027)
  • NOK 400 million in overdraft facility (annual renewal)

Interest conditions

NOKEURSEK
Bond loan3-month NIBOR* + 4.40%
Term loan3-month EURIBOR + 2.30%**
Credit facility3-month NIBOR + 1.60%3-month EURIOR + 1.60%3-month STIBOR + 1.60%
*The 3 months NIBOR has been hedged to a fixed rate of 3,843% for the full period

**The margin is based on the Group’s leverage ratio. See margin grid below:

> 3.25x = 2.75%

≤ 3.25x and > 2.25x = 2.30%

≤ 2.25x and > 1.25x = 2.10%

≤ 1.25x = 1.95%

Green Bond Financing

Green Finance Framework

NRC Group has established a Green Financing Framework, as part of the commitment to develop and supply services to build sustainable transport solutions.

The framework has been developed to align with the 2021 ICMA Green Bond Principles (including the updated Appendix I from June 2022) and the 2023 LMA, LSTA, APLMA Green Loan Principles.

The framework sets out the criteria for investments that can be financed or refinanced with green bonds, green loans other green debt instruments, and will be applied to NRC Group’ s investments that promote clean transportation projects. It covers investments and operating expenses related to infrastructure for rail transport, infrastructure enabling low carbon public transport, as well as investments in renewable biogas fuels and electrification of light and heavy vehicles and construction machines.

S&P Global Ratings has conducted an independent external assessment of the framework and has given it their highest rating, dark green, with a governance score of ‘Good’. Danske Bank acted as green structuring advisor in the development of the framework.

Green finance framework 2023
Second Opinion S&P Global Ratings

Green Bond debt

Based on the Green Finance Framework, the Group has issued a 4-year senior unsecured green bond with an initial issue amount of NOK 400 million. The bond carries an interest rate of 3 months NIBOR* plus a margin of 4.40%. An application will be made for the bond to be listed on the Oslo Stock Exchange. The net proceeds from the green bond will be used in accordance with the green project categories as described in the Green Finance Framework. The Group will annually until full allocation, and in the event of any material developments, provide investors with a Green Finance Report describing the allocation of proceeds and the environmental impact of the green projects.

*The Group has hedged the 3 months NIBOR to a fixed rate of 3,843% for the full period

Bonds termsNRC02
ISINISIN NO0013049403
TickerCurrently not listed
Security typeSenior unsecured open callable green bond
CurrencyNOK
Face value400,000,000
Coupon3 months NIBOR plus 4.40% p.a
Issue date25 October 2023
Maturity4 years (25 October 2027)
Bonds documentCurrently not listed

Bank Financing

The Group has a term loan facility with Danske Bank of EUR 22 million (as per Q3 2023). The term loan has quarterly installments of EUR 1,2 million until maturity in July 2027.

The Group has a multi-currency overdraft facility of NOK 400 million in Danske Bank. The overdraft facility is subject to annual renewal.

The loan facilities are secured by pledge over shares in subsidiaries amounting to NOK 2,000 million, receivables, inventory and operating equipment amounting to NOK 500 million and intra-group loans of NOK 2,000 million.

Covenants

The Group’s term loan and the NOK 400 million senior unsecured green bond contain certain financial conditions based on the facility agreements that may not be directly related to reported IFRS numbers:

• Interest coverage ratio: 12 months rolling EBITDA adjusted for acquisition costs and certain non-recurring items in relation to relevant financial net payments.
• Leverage ratio: Net interest-bearing debt in relation to adjusted 12 months rolling EBITDA
• Equity ratio: Equity in relation to total assets

Term loan and overdraft facility

CovenantsTerm loan (Danske Bank)
Interest cover ratio ≥ 3.00x
Leverage ratio≤ 3.75x*
Equity ratio> 25%
* ≤ 3.75x for Q3 2023, ≤ 3.50x for Q4 2023 and ≤ 3.25x thereafter

CovenantOverdraft facility (Danske Bank)
Borrowing base≤ 60% of accounts receivables
Drawdowns on the Group’s N0K 400 million multi-currency overdraft facility can maximum be 60% of last month’s book value of the Group’s accounts receivables. Minimum twice a year, clean-downs the overdraft facility should be made.

Bond loan

CovenantsBond loan
Interest coverage ratio≥ 2.50x
Leverage ratioNA
Equity ratio> 25%
For certain transactions, the bond agreement includes requirements of an incurrence test. Dividend distributions are allowed for up to 50% of the group's consolidated net profit the previous calendar year, and are subject to an incurrence covenant of leverage ratio ≤ 3.00x. Taking on new loan agreements incurrence is limited by a leverage ratio ≤ 3.50x. The incurrence test is based on committed amounts, e.g. meaning that the full NOK 400 million overdraft facility should be included in the test even if the facility is only partly used, or not used at all.

Definitions

EBITDA: Operating profit plus depreciations on fixed assets and right-to-use assets, plus amortisations on intangible assets, including intangible assets such as customer relations and order backlog accounted for as part of the purchase price allocation under business combinations and IT software investments.

Equity ratio: Total equity in relation to total assets.

Interest cover ratio (related to term loan agreement)): 12 months rolling EBITDA (adjusted for acquisition costs and certain non-recurring items) divided by the 12 months rolling net financial expenses.

Interest coverage ratio (related to bond loan agreement): 12 months rolling EBITDA (adjusted for acquisition costs and certain non-recurring items) divided by the 12 months rolling net financial expenses excluding interest expenses related to the bond loan.

Leverage ratio: Net interest-bearing debt divided by 12 months rolling EBITDA (adjusted for acquisition costs and certain non-recurring items).

Net interest-bearing debt: Interest-bearing liabilities minus cash and cash equivalents.